A Comparative Study of International Stock Market of Developed & Developing Countries
“A Comparative Study Of International Stock Market Of Developed & Developing Countries.”
ABSTRACT
An understanding of the difference in stock price exposures across markets helps to determine equilibrium premium and asset allocation of international portfolio. This paper is based on cross sectional study of various developed and developing countries for the year 2006,2007 and 2008. Eight developed countries viz.USA, UK, Australia, France, Germany, Hongkong, Japan, Singapore and Nine developing countries viz. India, Russia, Brazil, Indonesia, Korea, Malaysia, Taiwan and Mexico. Two way ANOVA has been used for analysis. The results shows that there is no significant difference in market capitalization among developed and developing countries. But the market capitalization of developing and developed countries differ significantly.
“ A Comparative Study Of International Stock Market Of Developed & Developing Countries.”
INTRODUCTION
The interrelationship between international stock markets is a key issue in international portfolio management and risk measurement. The efficient markets hypothesis has been one of the most widely criticized theories in the financial literature in recent years on the basis that investors may exhibit irrational and predictable biases mainly attributed to psychological factors. Trading and active portfolio management involve sophisticated brain functions such as logical reasoning, numerical computation, and short- and long-term planning which may often be tempered by emotional responses such as fear. Investors’ preference for the avoidance of loss may imply that significant fluctuations in prices are not necessarily related to the arrival of information on economic or financial variables but may also correspond to collective phenomena such as crowd effects or herd behavior. Behavioral finance
ABSTRACT
An understanding of the difference in stock price exposures across markets helps to determine equilibrium premium and asset allocation of international portfolio. This paper is based on cross sectional study of various developed and developing countries for the year 2006,2007 and 2008. Eight developed countries viz.USA, UK, Australia, France, Germany, Hongkong, Japan, Singapore and Nine developing countries viz. India, Russia, Brazil, Indonesia, Korea, Malaysia, Taiwan and Mexico. Two way ANOVA has been used for analysis. The results shows that there is no significant difference in market capitalization among developed and developing countries. But the market capitalization of developing and developed countries differ significantly.
“ A Comparative Study Of International Stock Market Of Developed & Developing Countries.”
INTRODUCTION
The interrelationship between international stock markets is a key issue in international portfolio management and risk measurement. The efficient markets hypothesis has been one of the most widely criticized theories in the financial literature in recent years on the basis that investors may exhibit irrational and predictable biases mainly attributed to psychological factors. Trading and active portfolio management involve sophisticated brain functions such as logical reasoning, numerical computation, and short- and long-term planning which may often be tempered by emotional responses such as fear. Investors’ preference for the avoidance of loss may imply that significant fluctuations in prices are not necessarily related to the arrival of information on economic or financial variables but may also correspond to collective phenomena such as crowd effects or herd behavior. Behavioral finance